Economy: Spring Statement

Lord Bourne of Aberystwyth Excerpts

Thursday 31st March 2022 Grand Committee

[Lord Bourne of Aberystwyth (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, who made some powerful points, if I may say so. I welcome this opportunity to speak on the Spring Statement and thank my noble friend the Minister for setting out aspects of it.

At the outset, it is worth stating that the Chancellor deserves enormous credit for his action through the pandemic, particularly on the furlough programme. We maintained a healthy position on employment, which many doubted—to accentuate the positives, it is worth stating that. However, the challenges now are very different. They include the cost of living, inflation and the cost of energy, which has been particularly exacerbated by the situation in Ukraine, to which my noble friend referred.

I differ slightly from the noble Lord, Lord Whitty, on the point about room for manoeuvre in the Budget. I agreed with much of what he said, particularly on net zero, which I will come on to. However, in relation to the position in the Budget for extra spending, it is worth stating that debt interest is set to hit £83 billion next year. That is nearly four times what it was last year and any rise in the cost of borrowing will send it up even higher; it is worth taking note of that. It is also worth stating that £83 billion exceeds the budgets on schools, the Home Office and the Ministry of Justice combined—and that is just the debt interest.

That is not to say that I do not think that more should have been done in this Budget—indeed, I think that more should have been done—but it is worth bearing in mind that this must be paid for. All those who say that we should not be going for the NI increase, of which there are many, must say where the money to pay for these extra spending elements will come from. That said, we should be spending more.

As the Minister outlined, there are things in the Spring Statement that are worthy of praise. The increase in the employment allowance will help employment. The extension of the annual investment allowance will help investment. For eligible small and medium-sized enterprises, the help with the Help to Grow digital scheme is certainly worth while.

However, I agree with the noble Lord, Lord Whitty, in relation to the dog that did not bark: the absence of any real emphasis on climate change and the fight for net zero. You cannot partially believe in the need to tackle climate change. You either believe in it or you do not. It is worth underlining that. To those who are unconvinced by the need to act, I say this: speak to people from Tuvalu, whose country will shortly disappear without effective action on climate change. We undoubtedly need to do more.

So I approve of the VAT relief on energy saving materials. It should go further, because we need to do more in the general area of climate change. I would still like to see—it may be coming down the line, so perhaps my noble friend will indicate whether an announcement will be made on it later—some help in relation to retrofitting and installing insulation in Victorian and other homes. This will not only help to increase employment but ease the pressure on the purchase of oil and gas, which is necessary in the current circumstances and indeed generally. It will also help in the fight against climate change. There is much to welcome from something that is relatively straightforward.

I will just backtrack on the measure for energy saving materials and climate change. It is good but I regret that, because of the protocol, Northern Ireland is receiving a Barnett share and is not subject to this and many other measures in the Spring Statement. Northern Ireland is in a dreadful limbo, which really needs sorting. I do not expect my noble friend to wave a magic wand and make that problem go away, but I would like her to say something about that in summing up.

Universal credit needs to rise by more than is currently planned in the Spring Statement, as outlined by my noble friend. That view is shared by the Child Poverty Action Group, Citizens Advice, the Trussell Trust and, perhaps less predictably, the Centre for Policy Studies, which, as my noble friend knows, tends to be on the right rather than the left of the political argument.

Backtracking again to the position on climate change, more needs to be done on the warm home discount scheme. Some of the poorest people benefit from this, so it needs extending. It helps those with pre-pay or pay-as-you-go meters, so this is something that could be looked at.

I have no particular criticism of the content of the Spring Statement. It just does not go far enough and we need to do far more on energy measures and for the poorest in our society, who will be up against the wall and suffering if we do nothing. Just look at the position on energy and cost of living; I do not blame the Government for this as these things are largely beyond their control and made worse by the position in Ukraine, but we need to recognise this and do something about it.

I am not sure if the noble Lord, Lord Whitty, agreed with raising the threshold for national insurance. It is not a massive measure, but it seems sensible for the threshold to be the same as it is for income tax. We have to be honest about the tax position: this has to be paid for. I agree with the national insurance increase, although it would have been better on income tax, but we need an increase in taxation to pay for the measures we are facing for the health service and social care. We also have to be realistic that it is necessary to extend universal credit and do some things on the environment, and both have to be paid for. Personally, I would look at a possible tax on online sales, or at least a one-off levy, and beyond that at oil and gas companies. I hope I have been realistic and am not just wishing for extra spending. This has to be paid for and that is how I would do it.

We need to recognise that we cannot simply say, “Let’s scrap all the tax increases, cut taxes and increase expenditure at the same time.” We have been down that road before and it does not work. The books have to be balanced, certainly in the medium to long term.